Wednesday, October 26, 2016

How Indie are Indie Publishers?

The recent Author
Earnings October report, that tracks Amazon book sales, showed a
steep drop in the market share and earnings of indie published books.
This is the first time in the nearly three years they been reporting
indie published ebooks have declined and came as a shock to many
indie publishers. No one knows why sales declined. Nor if this is
just a one quarter bump in the road or the shape of things to come.
However, several reasons have been suggested for this drop in sales.
Some indie authors believe Amazon is miscounting pages reads in its
Kindle Unlimited program, not only reducing author earnings for books
in that program, but because page reads also factor into the sales
rank charts, fewer page reads can depress a book's ranking, making it
less visible which results in fewer sales. It has also been suggested
that other tweak in the way Amazon promotes books have recently
favored traditional publishers' books. Others suggest that
traditional publishers, large, medium, small, and Amazon, are now
more effectively competing with indies published titles – using
social medium and special sale prices more aggressively. One last
suggestion is that the book promoting newsletter BookBub is featuring
many more traditionally published books than it did in the past, and
that it now too expensive for indie publishers to place paid ads in
the newsletter to promote their books. I gather that BookBub was a
major selling engine for indie publishers. However, no one knows for
sure. We'll have to see how it all pays out. Still, it did get me to
thinking about just how independent indie publishers really are that
minor changes in their retail channel or promotional opportunities
can cause a 20% dip in sales.

The short answer is
not very. When you come to think about it, how independent can any
ebook publisher be when they do 73% to 100% of their business with
one retailer? Amazon controls about 73% of the ebook market, with
iBook, Barnes & Noble, Kobo, Google, and Smashwords dividing the
remaining 27%. So even if an indie publisher puts their books for
sale in all the viable ebook stores, they still are relying on only
half a dozen retailers – a very narrow base to build a business on.

But their dependence
goes deeper than just the limited retail channels. It goes right to
the heart of their product. Indie publishers produce a digital file
on a hard drive which has little to no intrinsic value. It may have
potential value, but no commercial value until it is placed in its
retail container – an ebook format – which is owned by the
retailers via either a proprietary format or through their DRM
software, and then sold exclusively in their stores. In essence,
indie publishers are simply content providers for a handful of
retailers. And indeed, they actually provide this content for free,
in exchange for a cut of any sales their content might generate, though they have no say in how their content will be
sold. Amazon, for example, displays competing books on every book's
product, and will gladly sell ad space on a book's product page to
competitors as well. Amazon is simply selling books. What book it
sells doesn't matter to Amazon and the more books it has to offer –
the more competition the book producers must face – the better it
is for Amazon.

Amazon's Kindle
Unlimited program perfectly illustrates how little clout indie
publishers have with Amazon. To get in the program – which allows
subscribers to read an unlimited number of mostly indie published
books for free – publishers must agree not to sell their ebooks in
any other ebook store. In return Amazon pays these publishers each
month for however many pages it determines have been read in each
book. The entire process is a black box, completely opaque to
publishers in the program. Not only does Amazon alone decide what
rate they'll pay out each month, but publishers have no idea how
Amazon counts their pages read – the sort of deal you get when you
have no negotiating power at all.

The bottom line is
that indie publisher' business is dependent on Amazon and a few
smaller retailers. Amazon can promote and sell the products they
carry however they like. And even if indie publishers expand their
offerings to paper books and audio books, Amazon is still the major
seller of these versions as well, commanding about 50% of the print
book market. And since it is extremely hard for indie publishers to
get their paper books into brick and mortar stores, Amazon would
likely sell upwards of 95% of any paper and audio books produced as
well. In short, indie publishers are simply Amazon suppliers of a
commodity that is not, and unlikely ever will be, in short enough
supply for indie publishers to have any control of their market, or
indeed, commercial product.

I suppose it can be
argued that this has always been the case. Authors may have many more
options to sell their work to big, medium and small traditional
publishers, but seeing that they pretty much have to crawl through
the eye of a needle to get anything published, they are just as
dependent on the whims of large corporations as indie publishers. But
at least the select few who do sell their work are paid up front for
their work, and, at least in the past, offered a contract that
provided some financial security – something indie publishers
completely lack. The truth is that being an author is a poor business
choice. That, however, has never kept people from writing, nor is it
likely to prevent authors from self-publishing.